Wheat Climbs to Highest in Four Months on Argentina Crop Damage

Wheat rose for a third day, climbing to the highest level in four months after cold and dry weather reduced the outlook for production in Argentina, threatening to curb record global supplies.

Argentina last week forecast a wheat crop of 8.8 million tons, less than the 12 million tons predicted by the U.S. Department of Agriculture, and said 2013-14 exports of the grain may fall for a second year to 2 million tons.

The outlook "suggests a tense situation on the South American continent, this after the poor Brazil harvest," Paris- based farm adviser Agritel wrote. "In this context the latter should be looking to the U.S. for its import needs."

Wheat for December delivery rose 0.6 percent to $7.0975 a bushel on the Chicago Board of Trade by 5:24 a.m. after earlier touching $7.1125, the most for a most-active future since June 21. Futures trading volume was 73 percent higher than the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Milling wheat for November delivery traded on NYSE Liffe in Paris added 0.6 percent to 205.75 euros ($281.40) a ton.

About 100,000 hectares (247,105 acres) were damaged in Entre Rios and La Pampa provinces due to cold weather and lack of rain, according to the Argentine Agriculture Ministry. The country is the Southern Hemisphere’s second-biggest wheat exporter behind Australia.

Wheat prices have fallen 8.8 percent in Chicago this year as the USDA predicts global production will jump to a record 708.9 million metric tons. Prices rose 2 percent last week, advancing for a fifth straight week.

Brazilian Imports

"Lower wheat production in Argentina limits their exportable surplus and means Brazil will remain large buyers of U.S. wheat," Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a note today.

Argentina’s wheat exports may fall from 3.1 million tons in 2012-13 and 11.4 million tons in 2011-12, the country’s Agriculture Ministry reported last week.

Russia may lose 4 million tons from its potential harvest after rains restricted planting of winter crops, the Institute for Agricultural Market Studies said last week.

Corn for December delivery added 0.6 percent to $4.44 a bushel. Soybeans for delivery in November advanced 0.3 percent to $12.945 a bushel.